John Deere announces layoffs following earnings decline
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WASHINGTON, Aug. 22, 2016 - Agriculture and construction equipment giant John Deere today announced layoffs at two Iowa manufacturing plants. The news comes days after the company reported profit for its fiscal third quarter fell from the year-earlier period.
In all, 145 workers will lose their jobs: 115 in the city of Waterloo, and 30 in Davenport. The layoffs will be effective by the end of September. Company spokesman Ken Golden said employees were informed of the news on Monday.
“Deere continues to adjust the size of the company's production workforce to meet market demand for products manufactured at each of its factories,” Golden said in a statement. “Today's actions are consistent with projections that were communicated when Deere announced its third quarter results on Friday.”
Deere & Company has announced third quarter net income of $489 million, a drop of almost $23 million from the year-earlier quarter. Worldwide net sales and revenues were down 11 percent in the quarter and 9 percent for the first nine months of the fiscal year.
“John Deere's performance in the third quarter reflected the continuing impact of the global farm recession as well as difficult conditions in construction equipment markets,” Samuel Allen, the company chairman and CEO, said in a statement. He added that all Deere businesses remained profitable, a result of “sound execution of our operating plans, the impact of a broad product portfolio, and our success keeping a tight rein on costs and assets.”
Equipment sales in the company are expected to drop about 10 percent in fiscal 2016. The company's agriculture and turf division actually saw year over year increases in third quarter profit, but sales in that category are still expected to drop 8 percent this fiscal year.
In March, a similar announcement led to layoffs of 125 employees at two other Iowa plants, and two years ago, 460 Waterloo employees were placed on indefinite layoff.
“Layoffs are never easy because we understand the significant impact this action has on our employees, their families, and the community,” Dave DeVault, factory manager, said in a statement following the Waterloo layoffs in 2014. “We very carefully assess our workforce requirements to ensure we make the best possible decision to respond to various market conditions.”
The decline in revenues is in line with declining farm incomes across the country. In January, at the USDA Agricultural Outlook Forum, the department's Chief Economist Rob Johansson projected $1.6 billion drop in net farm income, about 3 percent below 2015. Commodity prices in all major markets are all forecast to take substantial drops, giving producers less disposable income to upgrade their machinery.
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